Banks launch campaigns to make academic achievements: Nic Cicutti reports on an opportunity for students to take their pick of offers aimed at new customers

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The Independent Online
COLM CLARKE celebrated the end of his exams by going for out for a drink. Quite a few drinks, in fact. But before he did, he called into his local branch of Barclays Bank to sort out his pounds 950 overdraft.

In doing so, he became one of the first people to take advantage of Barclays' decision this week to increase free overdrafts for final-year students from pounds 400 to pounds 700.

Up to now, the first pounds 400 of his overdraft would not have incurred any charges, while interest payable on the remaining pounds 550 came to pounds 35.20 over 12 months.

The new pounds 700 limit before charges are levied brings that down to pounds 16, a saving of almost pounds 19.

Yet Mr Clarke, a humanities student at Manchester Metropolitan University, was not over-excited at his good fortune: 'It's all right, I suppose. But I'm not ecstatic about it, to be honest. As far as I'm concerned, all the banks are lining up to give students some sort of overdraft.'

Now aged 24, he was first attracted to Barclays when he started his humanities course three years ago. 'They were giving away free gifts so I went for them.'

This year he has received a full grant of pounds 2,265. He also took out a student loan of pounds 585 and obtained a hardship grant of pounds 156 from the university. With his rent alone standing at pounds 38 a week, the past year has not been easy financially.

'It is now an inevitable part of student life that you will end up with an overdraft,' Mr Clarke said. 'The only way to avoid it is if you have a millionaire daddy who is prepared to bail you out. My dad is unemployed.

'Barclays have student advisers at our university branch and they can be quite helpful. Some of them are pretty clued up although they were inconsistent at times. It depends on who you get.

'Sometimes you would be talking to a friend and when they told you which adviser they were seeing, you knew they wouldn't be getting much out of them.'

In his own case, the advisers were useful. 'I have been a bit annoyed with them at times but then, in retrospect, they were quite fair. Things did at times threaten to get a little bit out of hand with my account.'

While it may all now be an academic question for Mr Clarke, the battle to win and keep student accounts has been hotting up over the past few years. Banks are offering improved deals to prospective clients.

One bank spokesman said wistfully: 'I can remember when I opened my account in 1980 and all they offered me was a free flexi-disc of Goon Show commercials. It's all changed now.'

Today, the least any student will get from all the main banks is a pounds 400 interest-free overdraft, plus a package of gifts when opening an account. Thereafter, the permutation of offers is endless.

Two months ago, Midland increased its free overdraft limit to pounds 700 but only for next year's crop of final- year students.

All the other banks are now putting the final touches to next year's student accounts, so it still pays to wait before leaping to open a new account.

Lloyds was typical when it said: 'We will be making an announcement soon, but I can say that our offer will beat the others.'

Meanwhile, both Barclays and Midland allow authorised overdrafts at 1 per cent over base rates, currently 5.25 per cent. National Westminster charges 2 per cent over base. Lloyds' fees are 0.9 per cent a month on the outstanding overdraft, an APR of 11.3 per cent.

Unauthorised overdrafts are punished by higher charges. Barclays comes in cheapest at an annualised rate of 18.3 per cent, followed by Lloyds at 26.8 per cent. Midland charges an APR of 29.5 per cent. NatWest brings up the rear with an annualised rate of 32.9 per cent.

(Photograph omitted)

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